CH1_rhk
Transcript of CH1_rhk
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2008 Pearson Prentice Hall, Electronic Commerce 2008, Efraim Turban, et al.
Chapter 1
Overview of Electronic Commerce
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Learning Objectives
1. Define electronic commerce (EC) anddescribe its various categories.
2. Describe and discuss the content and
framework of EC.3. Describe the major types of EC transactions.
4. Describe the digital revolution as a driver of
EC.5. Describe the business environment as a
driver of EC.
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Learning Objectives
6. Describe some EC business models.
7. Describe the benefits of EC to organizations,consumers, and society.
8. Describe the limitations of EC.
9. Describe the contribution of EC toorganizations responding to environmental
pressures.10. Describe online social and business
networks.
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Electronic Commerce:Definitions and Concepts
Electronic Commerce (EC)
The process of buying, selling, orexchanging products, services, orinformation via computer networks
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Electronic Commerce:Definitions and Concepts
EC can be defined from these perspectives:
Business process- Electronically conducted
Service- tool that cuts cost, improve quality and increasespeed of service delivery
Learning- Enabler of online training and education
Collaboration- Framework of inter and intra-organizational
collaborationCommunity- A gathering place
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Electronic Commerce:Definitions and Concepts
e-business
A broader definition of EC that includes not just the buying andselling of goods and services, but also servicing customers,collaborating with business partners, conducting e-learning and
conducting electronic transactions within an organization
->Use of Internet and other Information technologies to supportcommerce and improve business performance
-> Complement of EC
-> EC only considers transactions between bus.-partners
-> EC makes the concept fairly narrow
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Electronic Commerce: Definitions and Concepts
PPurchasing E-bookfrom amazon.com
Purchasing acomputer from dell
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Electronic Commerce:Definitions and Concepts
brick-and-mortar (old economy) organizationsOld-economy organizations (corporations) that perform theirprimary business off-line, selling physical products by means ofphysical agents,
Traditional, Almas
virtual (pure-play) organizationsOrganizations that conduct their business activities solely online
All digitized, e-book, software sellers.
click-and-mortar (click-and-brick) organizationsOrganizations that conduct some e-commerce activities, usuallyas an additional marketing channel,
Partially digitized, Dell
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Electronic Commerce:Definitions and Concepts
electronic market (e-marketplace)An online marketplace where buyers and sellers meet toexchange goods, services, money, or information
Supplemented by- interorganizational information systems (IOSs)
Communications systems that allow routine transaction processing andinformation flow between two or more organizations
intraorganizational information systemsCommunication systems that enable e-commerce activities to go onwithin individual organizations
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The EC Framework,Classification, and Content
intranetAn internal corporate or government network that usesInternet tools, such as Web browsers, and Internet
protocolsextranet
A network that uses the Internet to link multipleintranets
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The EC Framework,Classification, and Content
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The EC Framework,Classification, and Content
EC applications are supported byinfrastructure and by these five support areas:
People
Public policy
Marketing and advertisement
Support services
Business partnerships
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The EC Framework,Classification, and Content
Classification of EC by the Nature of theTransactions or Interactions business-to-business (B2B)
E-commerce model in which all of the participants are businessesor other organizations
business-to-consumer (B2C)E-commerce model in which businesses sell to individual shoppers, e-tailing-Online retailing, usually B2C
business-to-business-to-consumer (B2B2C)E-commerce model in which a business provides some product orservice to a client business that maintains its own customers
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The EC Framework,Classification, and Content
consumer-to-business (C2B)E-commerce model in which individuals use theInternet to sell products or services to organizations orindividuals who seek sellers to bid on products or
services they needmobile commerce (m-commerce)
E-commerce transactions and activities conducted in awireless environment
location-based commerce (l-commerce)M-commerce transactions targeted to individuals inspecific locations, at specific times
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The EC Framework,Classification, and Content
business-to-employees (B2E)
E-commerce model in which an organization deliversservices, information, or products to its individualemployees, sales people
collaborative commerce (c-commerce)
E-commerce model in which individuals or groups communicateor collaborate online, marks & spencer with its suppliers, boeing
consumer-to-consumer (C2C)E-commerce model in which consumers sell directly to otherconsumers, personal properties sale
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The EC Framework,Classification, and Content
e-learning
The online delivery of information for purposes oftraining or education
e-governmentE-commerce model in which a government entity buysor provides goods, services, or information from or tobusinesses or individual citizens
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The EC Framework,Classification, and Content
The Interdisciplinary Nature of ECCS, Marketing, Consumer Behavior, Finance, HRM,
MIS, Accounting, Management, Economics, Businesslaw
EC Failures eToys, Xpeditor, Webvan,
Boo
62%Fin.skills, 50%Little Mrkt. Knowldg.
EC Successes wal-mart, Intel, General
Electric, e-trade
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Digital Revolution Drives EC
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Business Environment Drives EC
The Business Environment
The business environment impact model
Business pressures
Organizational response strategies
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Business Environment Drives EC
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Business Environment Drives EC
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Business Environment Drives EC
Organizational response strategies:
-> Increase ability to adapt to changes and flexibility
-> Improve business process, introduce e-procurement
-> Improve CRM-> create join venture, partnerships, e-collaboration for
win-win situation
->Detect quality problems early and minimize them
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EC Business Models
business modelA method of doing business by which a company can generaterevenue to sustain itself
Wal-Mart buys merchandise, sells it and generates a profit.
A TV station provides free broadcasting to its viewers. Survivaldepends on advertisers and content providers.
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EC Business Models
Six elements of a business model includedescriptions of:1. Customersto be served and the companys relationships
with these customers including customers value proposition2. All productsand servicesthe business will offer
3. The business processrequired to make and deliver theproducts and services
4. The resourcesrequired and the identification of which onesare available, which will be developed in house, and whichwill need to be acquired
5. The organizations supply chain, including suppliersand
other business partners6. The revenues expected (revenue model), anticipated costs,
sources of financing, and estimated profitability (financialviability)
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EC Business Models
revenue model
Description of how the company or anEC project will earn revenue
value proposition
The benefits a company can derive fromusing EC. The value proposition defineshow a companys product or service
fulfills the needs of customers.
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Revenue Models
The major revenue models are:
Sales Wal-Mart, Amazon
Transaction fees - Commission
Subscription fees- AOL
Advertising fees - Google
Affiliate fees- Reference
Other revenuesources
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EC Business Models
Online direct marketing
Electronic tendering systems.
Name your own price
Find the best price Affiliate marketing
Viral marketing
Group purchasing
Online auctions
Product and servicecustomization
Bartering
Information brokers(informediaries)
Deep discounting
Membership
Value-chain integrators
Value-chain service providers
Supply chain improvers
Social networks,
communities, and blogging Direct sale by manufacturers
Negotiation
Electronic marketplaces andexchanges
Typical EC Business Models
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EC Business Models
tendering (bidding) systemModel in which a buyer requests would-be sellers to submit bids; thelowest bidder wins (reverse auction)
name-your-own-price modelModel in which a buyer sets the price he or she is willing to pay andinvites sellers to supply the good or service at that price,priceline.com
Find the best price modelhotwire.com, eloan.com
affiliate marketingAn arrangement whereby a marketing partner (a business, anorganization, or even an individual) refers consumers to the sellingcompanys Web site
viral marketingWord-of-mouth marketing in which customers promote a product orservice to friends or other people
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EC Business Models
group purchasingQuantity (aggregated) purchasing that enablesgroups of purchasers to obtain a discount
price on the products purchasedOnline auction
eBay highest bidders win
customizationCreation of a product or service according tothe buyers specifications, Dell, Nike, De Beers
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EC Business Models
Information brokersbizrate.com
exchangeschemconnect.com
Bartering- tradeaway.com
Deep Discounting- half.com
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EC Business Models
Value chain integrators-completepackage forcustomers,carpoint.com
Value chain service providers
specialized in supply chainfunctions, ups.com(logistics),
paypal.com(payment)Negotiation- ioffer.com
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Benefits of EC
Benefits to Organizations
Global reach, cost reduction, supply chain
improvements, business always open, low
communication cost, improved customer serviceand relationship
Consumers
Ubiquity, more product/services, no sales tax,
customized products/services,Information availability
SocietyEnable telecommuting, more public services, close
the digital divide
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Limitations of EC
Technological->Lack of universal standards for quality, security and
reliability
--> Bandwidth insufficiency specially for m-commerce
Difficult to integrate internet and EC software Software development tools are still evolving
Internet accessibility is still expensive and/or inconvenient
Nontechnological
Security and privacy concern Lack of trust in EC
Feel and touch products
Insufficient no. of buyers and sellers
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Social and Business Networks
social networks
Web sites that connect people with specified interests byproviding free services such as photo presentation, e-mail,blogging, etc.
Facebook.com, YouTube.com, Friendster.com, MySpace.com
Business-oriented networks are social networks whose primaryobjective is to facilitate business
YUB.comnetwork shoppers looking for discounts and bargain
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The Digital Enterprise
digital enterprise
A new business model that uses IT in a fundamental way toaccomplish one or more of three basic objectives: reach andengage customers more effectively, boost employee productivity,
and improve operating efficiency. It uses convergedcommunication and computing technology in a way that improvesbusiness processes
Exhibit-1.11
corporate portalA major gateway through which employees, business partners,
and the public can enter a corporate Web site
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The Digital Enterprise
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Managerial Issues
1. Is it real?
2. Why is B2B e-commerce so attractive?
3. There are so many EC failureshowcan one avoid them?
4. How do we transform our organizationinto a digital one?
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Managerial Issues
5. How should we evaluate the magnitudeof business pressures andtechnological advancement?
6. How can we exploit social/businessnetworking?
7. What should be my companys strategy
toward EC?
8. What are the top challenges of EC?